Faber’s Wal-Mart redux
could use a 33% discount*
Posted: Monday, September 28, 2009
(*Note: CNBC has shortened this production to one hour, after this review was posted.)
Something goes unsaid in David Faber's "The New Age of Walmart" — these guys, apparently, are extremely good merchants.
Wal-Mart has long been the New England Patriots of retail. The revenue keeps growing, the stores keep opening, and many people can't stand it.
Some of those who can't stand it are elites who insist they would never shop there, people who probably choose Target if they're ever inclined to try discount retail.
Others are much more vocal. Those critics can largely be grouped into three blocs: small-town businesspeople, unions and China activists.
They either don't want Wal-Mart in their community, or do want it but with a union, or don't want it selling stuff made in China.
The only issue for CNBC: Is Wal-Mart good television?
The answer is yes.
And that is fairly impressive, given a very important handicap: Everyone knows what Wal-Mart is. There are few secrets. Everyone knows roughly what it sells, how much it costs, how much it pays its workers, and what kinds of people typically shop there. The challenge is in telling us something we don't know and perhaps providing some human-interest drama.
Already winners of a DuPont award for their previous "The Age of Wal-Mart," Faber and producer Lori Gordon-Logan apparently figured they had a sure thing, and went back to the well one more time. There are a few legitimate news reasons for a Wal-Mart redo by Faber. There is a new CEO, and the company's reputation has improved from some serious lows of a couple years ago.
Nevertheless, Faber could broaden everyone's horizons a bit more by spending his time on a different subject. Entrepreneurs are not going to learn much in this go-round. So why this one again? Because people care about Wal-Mart, it's controversial, and there is a cottage industry of opponents guaranteed to watch it. About the only other corporate entity that would provide such bang for the Nielsen buck is Goldman Sachs, and those people will start buying their suits at Wal-Mart before they ever give Faber an inside look at their operation.
"New Age" hits you with the good stuff right away. The longer it goes, the weaker the material gets. Most CNBC "long-form" programming is one hour, a few exceptions are two. At 90 minutes, "New Age" feels like a production that thinks it deserves two hours but knows it only has material for one.
The order of the subjects is telling. First there is the small community arguing over allowing Wal-Mart. Then there is the opening of a new Wal-Mart store. Then there are the domestic critics and the union organizing attempts. Then there is China. This might suggest that in Faber's eyes, the biggest threat to Wal-Mart at present — if it is even a threat at all — is not Chinese sweatshops or the UFCW, but various American communities' potential refusal to allow the company to operate there.
And then there is the cheer. We see the cheer several times throughout the program; Faber clearly is intrigued by this. The cheer is important because it vividly represents what might be the one doubt that even sympathetic pro-business, anti-union capitalists have about the company: that it might feel a tiny bit like a business cult. "We don't want to see the family broken up," CEO Mike Duke says. "From Day 1, recruits are indoctrinated in the ways of Wal-Mart," Faber says.
What does Wal-Mart think about this program? It surely approves. Otherwise, it wouldn't have granted such access for a sequel, nor put its top three managers on camera.
Not only do we see an extensive interview with Duke, who succeeded Lee Scott last year, we hear from two individuals most people have never heard of: Eduardo Castro-Wright and Doug McMillon.
Faber doesn't discuss that transition, but the New York Times wrote it up in November 2008. The Times said analysts were not surprised that Duke was chosen given his position as chief of international — but that it was seen as a "two-candidate race" between Duke and Castro-Wright, who heads Wal-Mart's U.S. operations.
And McMillon, the Times says, was also a "contender." Faber asks him if he might be CEO some day — which might not be too far away given that Duke is 59 — and McMillon offered the type of corporate cliche answer that suggests he might be very interested in that outcome.
Comments from the brass (aside from Castro-Wright's interesting store setup details) are largely predictable. It's the lower-level strategists who bring life to the program.
Most interesting is listening to Wal-Mart's secretive scout team discuss in a van the variables of opening a store at a new site. What do the neighborhoods in the town look like ... what are the demographics, income and education levels ... what about traffic patterns, road quality, stoplight accessibility ... and a question asked repeatedly, how close is the nearest large grocery store.
Of course, it must be clandestine reconnaissance because "real estate prices tend to go up," and early opposition might occur, if locals become aware that Wal-Mart might be making a land purchase. No doubt the type of assessments made in this nondescript gray van are essential and obvious, and every big-box retailer must employ similar strategies. Still, one gets the sense with the Wal-Mart crew, these folks are really good at it.
Brian Hooper, who apparently oversees location-scouting for the company, told Faber, "It's definitely a positive when you don't feel like it's an area in transition," a cryptic comment given that nowadays Wal-Marts can be found everywhere — and the town identified by Faber as a big Wal-Mart battleground, Ellenville, N.Y., population under 4,000, appears to be such a "transition" area, fading from lack of development.
Appearance isn't everything ... but sometimes it counts for a lot. Viewers should be fascinated by simply observing the faces in this program. What do they look like? The executives, the workers, the protesters, the advocates, the customers. Who is this company serving, and who is it not serving?
The slickest face you'll see in "New Age" is that of Phil Serghini. Not surprisingly, Serghini is not a Wal-Mart manager or associate. He's a consultant type who tries to calm down the angry opposition, which puts him in places such as Ellenville. Serghini wears sharp suits and looks like a soap-opera actor. He could just as easily be lobbying for Apple Inc. or Goldman Sachs, and if you bumped into him on the street you would never guess he shops at Wal-Mart — vivid visual evidence that despite its folksy, blue-collar veneer, Wal-Mart also has an important elitist streak.
Steve Krulick, a Wal-Mart opponent described as an "activist" and former trustee of the Ellenville area, is apparently one of the few unswayed by the likes of Serghini. Faber gives Krulick a fair amount of screen time. Krulick says, "You can't have a community of this size survive that kind of shock to the economic system." According to this article by Brian Rubin in the Shawangunk Journal, Krulick's beef seems less with Wal-Mart and more with local planning and zoning boards that he claims haven't studied the issues well enough. Krulick, in fact, probably needs to hire Serghini for some PR labeling advice. According to the article, Krulick heads a group incredibly known as WERD — or Wawarsing-Ellenville for Responsible Development.
Faber adequately notes Krulick is in the minority, at least based on the public meetings. Faber also talks to a woman running a local clothing shop, which appeared to be an extremely crowded shop in a not-so-glamourous storefront. She says Wal-Mart would undercut her prices and end her business. But according to Rubin's article, some residents at the meeting covered by CNBC were very interested in price reduction. "One woman who said that she hadn't yet been to a hearing held up reading glasses, saying that she'd bought seven pairs of them for 79 cents at a Wal-Mart, and alleged that Rite Aid was charging over $33 for the same product," Rubin wrote.
"The conclusion of Krulick's comments was greeted with a chorus of boos," Rubin added. If anyone was making a wager on the fate of this Wal-Mart, the odds would probably suggest it opens. (Rubin's article, by the way, notes that Gordon-Logan's CNBC people were all over the town meeting aired by Faber, "often to the chagrin of Planning Board Chairman Marty Lonstein, who repeatedly asked the crew to get out of his line of sight so he could see members of the public who wished to speak.")
If proponents get their way, Ellenville will see the type of activity Faber and his crew thoroughly depict in Weaverville, N.C., where a new Wal-Mart Supercenter recently opened under the direction of Shawnalyn Conner.
Faber notes 1,200 people applied for the 350 jobs available. Short clips of the interviews are shown, and Conner shares several moments with the CNBC crew in the time leading up to the opening.
There is potential for drama here that goes unrealized. Faber has a good story in Jamie Adams, a 24-year-old married mother who drove five hours from Greenville, Tenn., to apply for a $9.75-an-hour pharamacy merchandise supervisor job. She's willing to move, and indeed is hired for the job. Three months later, she is "dissatisfied" and quits, silently driving away, apparently unwilling to explain on camera what happened. This story feels incomplete, and the viewer is completely left to wonder: Did this person get screwed, or did she just not have her act together?
The opening of the Weaverville store is a triumph for Conner, who seems like just the reliable, down-to-earth, company-first type that any organization would want to have. She says she's looking for "extroverted people." Customers were in the store for the ribbon-cutting, but maybe not as many as one would expect, though there's no sign of any local discontent.
As usual in his documentaries, Faber airs just the right amount of statistics. He notes Wal-Mart is the nation's largest employer, with 1.4 million workers who collectively earn an average $10.99 an hour. He says 82% of Wal-Mart workers are eligible for health insurance through the company but that only 52% of them actually have it. And there is this key stat, delivered in the Jamie Adams story: More than half of full-time, first-year associates quit within a year.
This is certainly an obstacle to union organizing. If people are going to quit, they're not going to invest time in starting a union. Those who stick around probably consider it better than many of the alternatives. One person who has stuck around and is fighting for a union is Eugene Hart, 33, who has been unloading Wal-Mart trucks in North Miami for three years.
Hart, according to Faber, makes $11.15 an hour. The retail industry average for this type of job, according to Faber, is $12.95. Faber asks Hart a very important question: How much should you make? Hart's response: "If you got experience, 13 bucks."
Hart then opens the door to a very relevant topic: health care. "The insurance is garbage," he says, citing a high deductible, and there are statements from him about requiring Medicaid when his child was born.
Faber chooses not to analyze Wal-Mart's health insurance offerings, a surprise given the national debate. This suggests he and the producers either thought plan details didn't translate well to television, or he didn't see solid evidence that the insurance truly is "garbage."
He does note, however, Wal-Mart's surprising OK of one of President Obama's stated goals. The Associated Press reported June 30, 2009 that Wal-Mart is backing Obama's call for all large employers to offer health insurance. According to the AP, Wal-Mart issued a letter to government officials, co-signed by Service Employees International Union President Andrew Stern and Obama transition adviser John Podesta, that said: "We are for an employer mandate which is fair and broad in its coverage. Any alternative to an employer mandate should not create barriers to hiring entry-level employees."
Once the program veers into China, interest rapidly begins to wane. Faber tours some locations with McMillon, discusses factory standards with Wal-Mart exec Rajan Kamalanathan and speaks with a number of rights activists. Some now-frequent cliches are shown, namely the live fish in Chinese supermarkets. One wonders how it never occurred to McMillon and his team that a bike rack in front of the store might be a good idea in China.
But then it becomes an interpreter-fest with workers, shoppers and activists. Worker abuse is a very serious issue. Documenting it and examining it is far beyond the scope of Faber's program, and we're left with a rehash of common knowledge, that this is still a country with a lot of poor people, with different values and standards than American values and standards, and this is the way it goes in a lot of countries, and try not to think about it at the cash register. Kamalanathan (who would want his job, really) basically says he'll look into the complaints reported by Faber.
Duke seems a likable sort despite speaking from the corporate script. His "family"-vs.-union terminology is doubted by Faber with a smile and brings a scoff from Hart. According to the New York Times, Scott, regarded as having a strong anti-union stance, might've stepped down abruptly to give the company a fresh start with the new regime in D.C. One writer who follows Wal-Mart says Scott once told a gathering that he asks execs to bring back pens from their hotel rooms. Oddly enough, the company doesn't seem to mind splurging on something that should be as humdrum as an annual meeting, hiring the likes of Ben Stiller. But frugality hasn't helped the share price much this decade. According to Google finance, WMT peaked, neatly enough, on Dec. 31, 1999, with an intraday high of $70.25. Nearly a decade later it is a good $20 below that.
Duke suggests the company's growth strategy is simply to sprout up everywhere it isn't already. Clothing has long been considered an albatross; Faber doesn't delve into whether the company sees growth potential from a new strategy there or whether it envisions higher-margin products in other areas that might draw more upscale shoppers.
Among the few store strategies are Castro-Wright noting at one point that a store is designed with the milk section visible from the front door, but a long distance away. He says the average customer spends 21 minutes in the store, not a whole lot of time for the retailer to make a great presentation and thus little things are important. He says the ceilings are lowered and not stacked to the top with inventory, for a more pleasant shopping experience. And he says the smocks are gone for purposes of change, and the logo was redesigned to appear softer to women (and apparently the company now bills itself as "Walmart" without the hyphen or star, but this review is maintaining the previous hyphenation standard). McMillon visits customers at their homes in China, though he says not as often as he would like.
The documentary has made waves in the cottage industry of Wal-Mart opposition. Eric Bull of Walmartwatch.com called it a must-see and saluted Faber's even-handed treatment. Bull mocks one of McMillon's rather remarkable comments, that he was concerned about his last promotion because of the travel and effect on his family, and Lee Scott basically told him the company is charting his course, and McMillon seems fine with that.
Wal-Mart doesn't list this program on the "News" portion of its Web site. According to its Web site, these are its "3 basic beliefs and values" — Respect for the individual, Service to our customers, Striving for excellence. There is also a motto on the site, "Saving People Money So They Can Live Better." There is also the "10-Foot Rule," described as Sam Walton's goal of speaking with any customer within 10 feet.
In the end, what we've got is a discount retailer that does it pretty well. How well and how fairly are subject to debate. While a natural target for unions, some of the other criticisms seem shallow. For some of its workers it is no doubt a fine destination. For others, it should be little more than a way station. People are not graduating from Wharton lining up to mop floors at Wal-Mart. Discount retail is not a sexy business but it's very important and there is great value in a high-quality operator. Labor historian Nelson Lichtenstein tells Faber, "All the big box retailers, basically the same." This program indicates, for most people — not all, but most — Wal-Mart works out for them, whether they're buying things, selling things, or working there.
"New Age" continues a theme of CNBC company-specific long-form programming: Extraordinary corporate access is traded for straight-up reporting of predictable company issues. CNBC viewers have seen many of them more than once probably, McDonald's, Norwegian Cruise Line, American Airlines, Anheuser-Busch, NASCAR and more. The results are win-win. There is no gotcha here, just a balanced, inside view. Faber gives ample time to Wal-Mart's critics, but those people might be disheartened that many viewers, particularly non-traditional Wal-Mart shoppers, are going to see this and absorb it as a 90-minute reminder of clean stores with a lot of cheap stuff probably not too far from where they live.
"The New Age of Wal-Mart" (2009)
Featuring: Brian Hooper, Phil Serghini, Steve Krulick, Mike Duke, Leslie Dach, Doug McMillon, Eduardo Castro-Wright, Eugene Hart, Meghan Scott, Nelson Lichtenstein, Jamie Adams, Shawnalyn Conner, Rajan Kamalanathan
Host: David Faber
Senior executive producer: Mitch Weitzner
Produced by: Lori Gordon-Logan
Written by: David Faber
Written by: Lori Gordon-Logan
Coordinating producer: Christie Gripenburg
Edited by: Patrick Ahearn
Camera: Plummer Crawley, Gerard Frasier, Alex Herrera, LeRoy Jackson, Marco Mastrorilli, Gerard Miller, Pat Pugliese, Michael Vaughn
Audio: David Foerder, David Grogan, Juan Rocha, David Schmidt, David Schumacher
Jib operator: Michael Kirsic
Prompter: Jessica Fischer
Grip: Jon Stevens
Associate producer: Judy Gee
Unit manager: Pamela Gaskins
Production team in China: Eric Baculinao, Steven Jiang, Juliana Yeh
Chief photographer: Angel Perez
Manager, digital post production: Vito Tattoli
Creative director: Victoria Todis
Senior animator: Jackie Dessel
Lead designer/animator: Peter Kourkoumelis
Art director: Dan Dutches
Designers: Jill Drago, Nick O'Connor, Brian Reilly
Senior archivist: Lawrence Beer
Archivist: David Evans
Interns: Cara Caruso, Michael Sard
Vice president, long-form programming: Ray Borelli